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  • INVESTOR REFERENCE BOOK Last updated March 14, 2016

    HealthSouth is a leading provider of post-acute healthcare services, offering both facility-based and home-based post-acute services in 34 states and Puerto Rico through its network of inpatient rehabilitation hospitals, home health agencies, and hospice agencies.

  • 2

    The information contained in this presentation includes certain estimates, projections and other forward- looking information that reflect HealthSouth's current outlook, views and plans with respect to future events, including legislative and regulatory developments, strategy, capital expenditures, development activities, dividend strategies, repurchases of securities, effective tax rates, financial performance, and business model. These estimates, projections and other forward-looking information are based on assumptions HealthSouth believes, as of the date hereof, are reasonable. Inevitably, there will be differences between such estimates and actual events or results, and those differences may be material.

    There can be no assurance any estimates, projections or forward-looking information will be realized.

    All such estimates, projections and forward-looking information speak only as of the date hereof. HealthSouth undertakes no duty to publicly update or revise the information contained herein.

    You are cautioned not to place undue reliance on the estimates, projections and other forward-looking information in this presentation as they are based on current expectations and general assumptions and are subject to various risks, uncertainties and other factors, including those set forth in HealthSouth's Form 10‑K for the year ended December 31, 2015 and in other documents we previously filed with the SEC, many of which are beyond HealthSouth's control, that may cause actual events or results to differ materially from the views, beliefs and estimates expressed herein.

    Note Regarding Presentation of Non-GAAP Financial Measures The following presentation includes certain “non-GAAP financial measures” as defined in Regulation G under the Securities Exchange Act of 1934. Schedules are attached that reconcile the non-GAAP financial measures included in the following presentation to the most directly comparable financial measures calculated and presented in accordance with Generally Accepted Accounting Principles in the United States. HealthSouth's Form 8-K, dated March 14, 2016 to which the following supplemental slides are attached as Exhibit 99.1, provides further explanation and disclosure regarding HealthSouth's use of non- GAAP financial measures and should be read in conjunction with these supplemental slides.

    Forward-Looking Statements

  • 3

    Table of Contents

    Guidance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-6

    The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-22

    Business Outlook: 2016 to 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23-28

    Free Cash Flow. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29-33

    Growth. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34-47

    Alternative Payment Models . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48-56

    Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57-63

    Information Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64-70

    Operational Metrics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71-75

    History Recast by Segment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76-83

    Industry Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84-99

    Reconciliations to GAAP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100-117

    End Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118-122

  • 4

    Guidance (as of March 14, 2016)

  • 5

    $682.5 million

    $2.24

    Adjusted EBITDA

    Adjusted Earnings per Share from Continuing Operations Attributable to HealthSouth(1)

    Guidance

    $3,162.9 million

    Net Operating Revenues

    2015 2016

    Net Operating Revenues

    $3,550 million to $3,650 million

    Adjusted EBITDA

    $765 million to $785 million

    Adjusted Earnings per Share from Continuing Operations Attributable to HealthSouth(1)

    $2.32 to $2.44

    12% to 15%

    Projected Year-Over-

    Year Growth

    12% to 15%

    3% to 9%

    Earnings per share guidance assumes a diluted share count of ~101 million shares and an approximate 41% tax rate. Refer to pages 119-122 for end notes.

  • 6

    Inpatient Rehabilitation

    u Full-year contribution from 2015 acquisitions and openings, including Reliant Transitioning to HLS business model

    u Continued evolution of payor mix Managed care and Medicaid

    increases expected to moderate in 2016

    u Estimated 1.6% increase in Medicare pricing (effective October 1, 2015)

    u Moderating increase in group medical expense

    u Bad debt expense level as percent of revenue

    2016 Guidance Considerations

    Home Health and Hospice

    u Full-year contribution from 2015 acquisitions and openings, including CareSouth Transitioning to Encompass business

    model u Estimated 1.7% decrease in

    Medicare pricing (effective January 1, 2016)

    u Enhanced clinical collaboration with HealthSouth IRFs

  • 7

    The Company

  • 8

    Inpatient Rehabilitation

    Portfolio - As of December 31, 2015

    121 Inpatient Rehabilitation Hospitals • 33 operate as JVs with Acute

    Care Hospitals

    29 Number of States(plus Puerto Rico)

    ~ 27,100 Employees

    HealthSouth: A Leading Provider of Post-Acute Care

    Encompass Home Health and Hospice

    Portfolio – As of December 31, 2015

    179 Adult Home Health Locations

    7 Pediatric Home Health Locations

    27 Hospice Locations

    23 Number of States

    ~ 7,600 Employees

    IRF Marketshare 10% of IRFs 21% of Licensed Beds 28% of Medicare Patients Served

    Home Health and Hospice Marketshare

    4th largest provider of Medicare-certified skilled

    home health services

    60% of HealthSouth's IRFs are located within a 30-mile radius

    of an Encompass location.

    Note: One of the 121 IRFs and two of the 179 adult home health locations are nonconsolidated. These locations are accounted for using the equity method of accounting.

  • 9

    Adjusted EPS*(1)

    Track Record

    2011 2012 2013 2014 2015

    $2,027 $2,162

    $2,273 $2,406

    $3,163($ millions)

    2011 2012 2013 2014 2015

    $466

    $506

    $552 $578

    $683

    ’11- ’15

    CAG R =

    10. 0%($ millions)

    ’11- ’15

    CAG R =

    11. 8%

    Adjusted EBITDA*

    2011 2012 2013 2014 2015

    $1.20

    $1.61

    $1.94 $2.06

    $2.24

    ’11- ’15

    CAG R =

    16 .9%

    2011 2012 2013 2014 2015

    $243

    $268

    $331

    $311

    $389

    Adjusted Free Cash Flow*(12)

    ($ millions)

    ’11- ’15

    CAG R =

    12.5 %

    Revenue

    CAGR = Compound annual growth rate; the average growth rate over a period of years. * Reconciliation to GAAP provided on pages 33 and 101-117; Refer to pages 119-122 for end notes.

  • 10

    Inpatient Rehabilitation Segment

    Major Services • Rehabilitation Physicians: manage and treat medical needs of patients • Rehabilitation Nurses: oversee treatment programs of patients • Physical Therapists: address physical function, mobility, safety • Occupational Therapists: promote independence through activities of daily living (ADL's) • Speech-Language Therapists: treat communication and swallowing disorders • Case Managers: coordinate care plan with physician, caregivers and family • Post-discharge services: outpatient therapy and Encompass home health and hospice

    Inpatient Rehabilitation Hospitals ("IRFs")

    Refer to pages 119-122 for end notes.

    102 of HealthSouth's hospitals hold one or more disease- specific certifications from The Joint Commission’s Disease-Specific Care Certification Program.(2)

  • 11

    2014 2015

    14.5% 13.9%

    11.4% 10.7%

    HealthSouth IRF Quality Referral Sources: 92% Acute Care Hospitals 7% Physician Offices/Home

    1% Skilled Nursing Facilities

    1. Neurological 19.9% 2. Stroke 17.0%